What is the Direct Payment Plan?Direct Payment is a smart way to collect payments. It can save your company time and money, build customer satisfaction and retention, and improve your payment operation efficiency. The Direct Payment Plan is an e-CAP application that allows consumers to have payments electronically withdrawn from their checking or savings account on a pre-determined date. The Direct Payment Plan uses the ACH (Automated Clearing House) and the Federal Reserve to process the electronic withdrawals.Back to top How is the Direct Payment Plan used?The Direct Payment Plan is used by merchants to accept recurring payments electronically. These recurring bills can come from several sources including:- Dental Offices
- Daycare
- Private Schools
- Gyms/Health clubs
- Karate Schools
Back to top Who uses the Direct Payment Plan?More and more people select the Direct Payment Plan as their preferred method of paying their bills. 43% of U.S. Households have at least one bill paid automatically. 30 – 50% of all life insurance payments are paid using Direct Payments. 5 – 20% of all utility customers choose to pay using Direct Payment. Back to top Benefits of the Direct Payment PlanThe Direct Payment Plan will bring benefits to consumers, as well as businesses and financial institutions. With an already high level of consumer awareness and incentives such as postal rate increases Direct Payment Plans are becoming even more popular. Some of the benefits using a Direct Payment Plan are:
For the Company- Elimination of check handling and check processing
- Elimination of costs associated with printing and mailing monthly bills
- Reduced delinquencies of receivables
- Increased member or donor retention
For the Consumer- Elimination of check, envelope, and postage costs
- Elimination of past due payments, late charges, or derogatory credit reporting
- Convenient bill paying for today’s hectic family
Back to top Why Use the Direct Payment Plan?Why use Direct Payment for the bills your company sends out? Because Direct Payment helps companies save time and money.- Direct Payment ensures timely payment collection. Your company will receive customer payments on a predetermined date, reducing late fees and delinquent payments.
- Direct Payment improves your company's cash flow. With Direct Payment, the timing of your receipts will be more predictable and reliable, allowing for more accurate cash flow forecasting and informed investment decisions.
- Direct Payment increases your company's efficiency. Offering Direct Payment helps you eliminate the manual, labor-intensive process of handling payments made by check and improves your payment operations.
- Direct Payment saves your company money. Direct Payment saves companies an average of 11.5 cents per payment (versus checks) due to reduced processing costs.
- Direct Payment reduces exception processing. People who use Direct Payment tend to maintain higher balances in their bank accounts, so fewer payments are returned. With Direct Payment, customer information is more accurate, reducing posting errors.
- Direct Payment fosters customer satisfaction and retention.
- Direct Payment enhances customer service. Your customers will appreciate having a payment option that is reliable, accurate, on time and confidential. Eighty-four percent of Direct Payment users are very satisfied with it.
- Direct Payment improves your company's image. Offering Direct Payment shows your customers that your company is customer-oriented, technologically savvy and cost-conscious. Forty-three percent of consumers already use Direct Payment for at least one payment and most would like to increase that number (NACHA).
- Direct Payment helps maintain customer loyalty. With a convenient payment plan in place, your customers will be more likely to continue using your company's services.
- Direct Payment gives customers peace of mind. Consumers using Direct Payment are protected by the Electronic Funds Transfer Act of 1978, known as Federal Regulation E. Your customers will appreciate that they must be notified 10 days in advance if the amount of a bill varies from the previous bill, and that they have the right to stop or reverse a payment that may be in error.
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